The European Commission has presented for
consultations new draft rules to exempt more subsidies from the notification
obligation laid down in EC Treaty state aid rules. The new so-called ' block
exemption' Regulation would on the one hand simplify and consolidate into one
text five existing block exemptions for aid to SMEs, research and development
aid in favour of SMEs, aid for employment, training aid and regional aid. In
addition, the new Regulation would also allow the block exemption of three new
types of aid: environmental aid, aid in the form of risk capital and exempting
Research and Development aid (R&D) also in favour of large enterprises.
Subsidies which fulfilled the conditions laid down in the new Regulation would
be considered as compatible with state aid rules without requiring prior
notification to the Commission. Interested parties are invited to submit
comments by 3 June 2007. Following a further round of consultations, the
Commission intends to adopt the final version of this regulation before the
summer of 2008.The initiative forms part of the State Aid Action Plan, designed
to simplify the state aid rules and refine the economic analysis of subsidies
(see IP/05/680
and MEMO/05/195).

Competition Commissioner Neelie Kroes said: “The state aid reform
package is well under way. This latest draft Regulation will make a significant
contribution to the Commission's better regulation and simplification agenda.
Once adopted, it will facilitate proper compliance with state aid rules while
minimising bureaucracy for both Member States and the Commission.”

The five current block exemption regulations cover the following types of
aid: aid to SMEs, research and development aid in favour of SMEs, aid for
employment, training aid and regional aid. Under the new draft Regulation just
presented for consultation, all of these would be consolidated into one single
Regulation with simplified and harmonised conditions of application. Specific
rules have also been added for aid granted in the sectors of agriculture,
fisheries and transport. In addition, the draft Regulation would exempt three
types of aid which have never been included in a block exemption before:
environmental aid, aid in the form of risk capital and exempting research and
development aid (R&D) in favour of large enterprises.

For the types of aid covered and fulfilling the conditions of the new draft
Regulation, Member States would no longer have to notify their aid measures to
the Commission and await the Commission's approval before they could start
granting aid, and so could implement such measures without delay. For instance,
they would be allowed to grant aid of up to 50% of project costs to companies
carrying out industrial research.

As foreseen by Council Regulation (EC) 994/98, the draft Regulation will be
sent to the Member States in order to allow them to comment in the course of a
meeting planned during the summer. The draft will thereafter be published in the
EU's Official Journal to allow stakeholders to make their views known. The draft
will then again be discussed with Member States in early 2008, with a view to
the Commission adopting the final version of this regulation before summer
2008.

The draft Regulation for a general block exemption forms part of the
Commission’s implementation of its June 2005 State Aid Action Plan
outlining the guiding principles for a comprehensive reform of state aid rules
for 2005-2009. In particular the document sets out how the Commission intends to
use EC Treaty state aid rules to encourage Member States to contribute to the
Strategy for growth and jobs by reducing overall aid levels while focusing
remaining aid on improving the competitiveness of EU industry, creating
sustainable jobs, ensuring social and regional cohesion, and improving public
services. In this respect, the proposal complements the Commission Decision and
Framework on services of general economic interest (see IP/05/973),
the Guidelines on Risk Capital (see IP/06/1015),
the Framework on research, development & innovation (see IP/06/1600)
and the new de minimis Regulation (see IP/06/1765)
adopted in 2006.

This consolidation of different texts is in line with the Commission's
"Better Regulation" agenda. The draft Regulation also fits into the Commission's
agenda to promote "Less and better targeted aid" in that it facilitates the
possibilities for Member States to grant subsidies that clearly fulfil
horizontal objectives in line with the European Union's objectives for growth
and jobs. The proposal will be available at: